The City of Cape Town’s application to include selected portions of Bellville, Parow and Maitland into its Urban Development Zone(UDZ) has been approved by the Minister of Finance, with the validity period for this incentive being extended from 31 March 2014 to 31 March 2020.
The UDZ is a tax incentive administered by National Treasury that aims to address urban decay in South Africa’s inner cities by promoting private sector-led investment in commercial and residential developments. The incentive ties in well with this administration’s focus on creating an Opportunity City in which investments grow and jobs are created.
The two areas to be incorporated include 83ha extending from Bellville to Parow, and 42ha in Maitland. Both of these sites are located within the N1-Voortrekker Road corridor, which is described as the economic core of the city. These economic centres, however, are suffering from a lack of investment, and thus require special attention to ensure development. The extension of the UDZ aims to provide proactive support to the Voortrekker Road Corridor Urban Regeneration Area.
The upgrading of rundown buildings in these areas will be given priority in line with the UDZ’s purpose of rejuvenating South Africa’s inner cities. The UDZ allows for significant tax savings for building developments which fall within the following categories:
• Erection, extension or improvement of or addition to an entire building;
• Erection, extension, improvement or addition of part of a building representing a floor area of at least 1 000 m2;
• Erection, extension, improvement or addition to low-cost housing; or
• Purchase of such a building or part of a building directly from a developer.
During the selection process, over 20 areas throughout the metropolitan area were considered for possible UDZ inclusion. The Bellville and Maitland extensions were judged against criteria set out by the National Treasury and were found to be the areas that would draw the most benefit from the application of the incentive. These areas have both been identified as priority areas in the Integrated Development Plan (lDP) and have geographic and economic linkages to the existing UDZ.
The intensification of land use in these sites will be further facilitated through the upgrade of public infrastructure and the general regeneration of the area. For example, a critical consideration which informed the selection of the Bellville extension was the imminent establishment of a Special Rating Area (SRA) in the area. National Treasury has identified such public-private partnerships as a decisive factor in the success of UDZs, both in terms of improving cleansing and public safety, and also as another means of encouraging investment.
In order to maximise the UDZ’s efficacy, the City will ensure that the UDZ is actively and strategically marketed, and will disseminate relevant information among property developers and financial investment communities. Contact details for technical advice and support on how to apply for this incentive are provided via the City’s planning portal
When the UDZ incentive was first introduced in 2003, the City of Cape Town demarcated an area of 551ha in the Cape Town CBD, which extended through Woodstock, Salt River, Observatory and Mowbray including the western sections of Voortrekker and Klipfontein Roads, as well as 78ha of the Bellville CBD.
“This UDZ has become increasingly effective at buttressing fledgling development interest in these areas which were previously considered unattractive for investment,” said Councillor Garreth Bloor, Mayoral Committee Member for Economic, Environmental and Spatial Planning. “We anticipate that the Bellville and Maitland extensions will reap the same benefits.”